<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended - March 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission File Number 0-18299
EARTHFIRST TECHNOLOGIES, INC.
(Exact name of small business issuer as specified in its charter)
<TABLE>
<S> <C>
Florida 59-3462501
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
</TABLE>
7887 Bryan Dairy Road, Suite 105, Largo, Florida 33777
(Address of principal executive offices)
(727) 548-0918
(Issuer's telephone number)
TOUPS TECHNOLOGY LICENSING, INCORPORATED
(Former name, former address and former fiscal
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
12, 13 or 15 (d) of the Exchange Act during the past 12 months (or such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes _____ No _____
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity , as of May, 12, 2000: 38,362,117 shares $ .001 par value common stock.
Transitional Small Business Disclosure Format (check one) Yes No X
---
<PAGE> 2
FORM 10-QSB
EARTHFIRST TECHNOLOGIES, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. Financial Information
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 2000
(Unaudited) and December 31, 1999....................................................1
Condensed Consolidated Statements of Operations for the
three months ended March 31, 2000 and 1999 (Unaudited)...............................3
Condensed Consolidated Statements of Cash Flows for the three months
ended March 31, 2000 and 1999 (Unaudited)............................................4
Notes to Condensed Consolidated Financial Statements.................................6
Item 2 - Management's Discussion and Analysis or Plan of Operation...................11
PART II. Other Information..................................................13
Item 6. Exhibits and Reports on Form 8-K.............................................13
Signatures.............................................................................................14
</TABLE>
<PAGE> 3
EARTHFIRST TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
March 31,
2000 December 31,
(unaudited) 1999
------------ ------------
<S> <C> <C>
Current assets:
Cash $ 584,092 $ 72,224
Accounts receivable 28,969 19,501
Inventories 970,462 1,072,280
Prepaid expenses and other current assets 79,952 63,166
------------ ------------
Total current assets 1,663,475 1,227,171
Property and equipment, net 1,867,639 1,970,334
Deferred charge, net 248,326 279,367
Other assets 81,526 80,668
------------ ------------
$ 3,860,967 $ 3,557,540
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Notes payable $ 276,063 $ 184,063
Current maturities of notes payable, related parties 586,215 719,803
Current maturities of capital lease obligations 250,000 250,733
Accounts payable 1,262,197 1,149,356
Accrued expenses 1,011,609 803,988
Customer deposits 284,299 288,148
Dividends payable 52,500 39,375
------------ ------------
Total current liabilities 3,722,883 3,435,466
Notes payable, related parties, less current maturities 352,075 41,487
Capital lease obligations, less current maturities 586,215 622,538
Convertible debentures, net of discount 297,968 750,000
------------ ------------
Total liabilities 4,959,140 4,849,491
------------ ------------
Commitments and contingencies -- --
Stockholders' deficit:
Series A preferred stock, par value $1, 10,000,000
shares authorized, 750 shares issued and outstanding 750 750
Common stock, par value $.001, 50,000,000
shares authorized, 36,626,609 (2000) and 33,290,948 (1999)
</TABLE>
- 1 -
<PAGE> 4
<TABLE>
<S> <C> <C>
shares issued and outstanding 36,627 33,291
Additional paid-in capital 20,010,051 17,988,553
Accumulated deficit (19,864,415) (18,046,485)
------------ ------------
183,013 (23,891)
------------
Less treasury stock (1,950,000 shares at cost) (1,268,060) (1,268,060)
------------ ------------
Total stockholders' deficit (1,098,173) (1,291,951)
------------ ------------
$ 3,860,967 $ 3,557,540
============ ============
</TABLE>
See Notes to Financial Statements
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<PAGE> 5
EARTHFIRST TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
1999
2000 (restated)
------------ ------------
<S> <C> <C>
Revenue $ 160,073 $ 250,737
Cost of sales 158,644 127,860
------------ ------------
Gross profit 1,429 122,877
Selling, general and administrative expenses 1,515,283 1,362,699
Research and development expenses 166,813 1,822,851
------------ ------------
Loss from continuing operations before income
taxes and other items (1,680,667) (3,062,673)
------------ ------------
Other income (expenses):
Interest expense (137,264) (92,825)
Other income -- 2,236
------------ ------------
(137,264) (90,589)
------------ ------------
Loss from continuing operations before
income taxes (1,817,930) (3,153,262)
Income taxes -- --
------------ ------------
Loss from continuing operations (1,817,930) (3,153,262)
Loss from discontinued operations (no applicable
income taxes) -- (255,518)
------------ ------------
Net loss (1,817,930) (3,408,780)
Preferred stock dividends (13,125) --
------------ ------------
Net loss attributable to common stockholders $( 1,831,055) $( 3,408,780)
============ ============
Loss per common share attributable to common stockholders:
Continuing operations $( .05) $( .14)
Discontinued operations -- (.01)
------------ ------------
Net loss $( .05) $( .15)
============ ============
Weighted average shares outstanding 34,757,123 23,389,512
============ ============
</TABLE>
See Notes to Financial Statements
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<PAGE> 6
EARTHFIRST TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
(restated)
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,817,930) $(3,408,780)
Net cash used in operating activities:
Depreciation and amortization 166,041 92,469
Stock-based compensation 94,010 1,965,878
Interest expenses funded from debt conversion to equity 73,620 --
Amortization of beneficial conversion feature of
convertible debenture 7,125 87,500
Increase (decrease) in cash due to changes in:
Accounts receivable (9,468) (7,321)
Inventories 101,818 (223,273)
Prepaid expenses and other current assets (16,786) (52,224)
Other assets (859) 77,107
Accounts payable and accrued expenses 448,719 (893,470)
Customer deposits (3,850) (25,500)
----------- -----------
Net cash used in operating activities (957,560) (2,387,614)
----------- -----------
Cash flows from investing activities:
Loans to related parties -- (174,954)
Acquisition of property and equipment (32,305) (306,748)
----------- -----------
Net cash used in investing activities (32,305) (481,702)
----------- -----------
Cash flows from financing activities:
Proceeds from sale of capital stock 661,789 2,324,900
Principal repayments on capital lease obligations (37,056) (39,454)
Proceeds from convertible debentures 700,000 750,000
Proceeds from notes payable related party 177,000 --
----------- -----------
Net cash provided by financing activities 1,501,733 3,035,446
----------- -----------
Increase in cash 511,868 166,130
Cash, beginning of period 72,224 772,080
----------- -----------
Cash, end of period $ 584,092 $ 938,210
=========== ===========
</TABLE>
See Notes to Financial Statements
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<PAGE> 7
EARTHFIRST TECHNOLOGIES, INC.
AND SUBSIDIARIES
CONDENSED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2000 AND 1999
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash paid during the period for:
<TABLE>
<CAPTION>
2000 1999
------------------ ------------------
<S> <C> <C>
Interest $ -- $ --
================== ==================
Income taxes $ -- $ --
================== ==================
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING AND INVESTING ACTIVITIES
During the three months ended March 31, 2000, we:
- - Converted $517,956 of convertible debentures along with accrued interest of
$36,257 and interest through the date of conversion of $73,620 by the
issuance of 1,0347,784 shares of common stock
- - Incurred $42,980 of loan costs through the issuance of 15,441 shares of
common stock
During the three months ended March 31, 1999, the Company:
- - Incurred $63,900 of loan costs through the issuance of common stock
warrants
- - Acquired equipment with a cost of $341,200 and $7,514 through capital lease
obligations and the issuance of 10,000 shares of common stock, respectively
- - Incurred joint venture investment costs of $375,706 through the issuance of
500,000 shares of common stock
See Notes to Financial Statements
- 5 -
<PAGE> 8
NOTES TO FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES:
The financial statements and notes thereto should be read in
conjunction with the consolidated financial statements and notes for
the year ended December 31, 1999.
In the opinion of management, all adjustments (consisting only of
normal recurring accruals) necessary for a fair presentation of the
results of operations for the periods presented have been included. The
results of operations for the three months ended March 31, 2000 and
1999 are not necessarily indicative of the results for a full year.
Net loss per share was computed based on the weighted average number of
shares outstanding during the periods presented. Diluted earnings per
share is considered to be the same as basic earnings per share since
the effect of common stock options and warrants and convertible
debentures and preferred stock is anti-dilutive.
During 1999, we had an operating segment which was discontinued during
the third quarter of 1999. Results for the quarter ended March 31, 1999
have been restated to reflect the discontinuance of this segment.
2. RESTATEMENT:
As more fully discussed in the Form 10-KSB for the year ended December
31, 1999, we made certain fourth quarter 1999 adjustments which
applied, in part, to the financial statements of the first, second and
third quarters of 1999 as previously reported. Accordingly the
accompanying financial statements for the quarterly period ended March
31, 1999 have been restated to give effect to those adjustments, and
net loss and net loss per share as previously reported has been
increased by $1,583,691 and $.07, respectively, as follows:
1) To reflect the reversal of certain 1998 sales (decrease in net
loss of $51,134);
2) To reflect properly stock-based compensation for services and
license fees ($1,634,825 increase in net loss);
3) To reflect the issuance of 500,000 shares of common stock pursuant
to a joint venture agreement (no effect on net loss); and
4) To reclassify research and development expenses from selling,
general and administrative expenses to conform with the 2000
presentation (no effect on net loss).
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<PAGE> 9
3. MANAGEMENT PLANS REGARDING LIQUIDITY AND CAPITAL RESOURCES:
We experienced recurring net losses since our inception and, as such,
have experienced negative operating cash flows through March 31, 2000.
We historically funded these negative operating cash flows with
proceeds from sales of common and preferred stock, notes and
convertible debentures payable and equipment sale/leaseback
transactions. The total amount received from these sources approximated
$5,500,000 during 1999, $1,563,000 during the quarter ended March 31,
2000 and $537,000 from April 1 through May 12, 2000. Notwithstanding
the proceeds of these financing sources, we had negative working
capital of approximately $2,100,000 at March 31, 2000.
As discussed in Note 9, on May 15, 2000 we acquired 100% of the
outstanding stock of Strategic Acquisition Corporation, a Florida
corporation, in exchange for 26,500,000 shares of common stock, and, in
connection therewith, our management and board of directors have
undergone significant changes. Management is currently evaluating our
cost structure and expects to make significant cost reductions in the
near term. Management expects to achieve certain economies of scale by
combining certain of our operations with those of the acquired
corporation. Additionally, we expect to have limited short-term access
to the positive working capital resources of the acquired corporation.
However, there can be no assurance that these efforts will result in
positive operating cash flows or restore our working capital to
adequate levels. As such, we may continue to require additional equity
or debt financing in order to cover our cash requirements and continue
as a going concern.
4. MAJOR CUSTOMER INFORMATION:
During the three months ended March 31, 2000, we derived revenues from
one customer which aggregated 67% of total revenues.
5. SEGMENT REPORTING:
The following summarizes key segment information for 2000:
<TABLE>
<CAPTION>
BORS Tech Development
Manufactured Contract Health /Environmental
Products Manufacturing Care Solutions Corporate Consolidated
------------ ------------- ---- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenue from external
customers $ 126,945 $ 33,128 -0- $ 160,073
Cost of sales 117,660 40,984 -0- 158,644
Gross profit 9,285 ( 7,856) -0- 1,429
Research & Development
166,813 166,813
Segment Assets 839,227 1,686,910 155,875 314,453 864,502 3,860,967
</TABLE>
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<PAGE> 10
The following summarizes key segment information for 1999:
<TABLE>
<CAPTION>
BORS Tech Development
Manufactured Contract Health /Environmental
Products Manufacturing Care Solutions Corporate Consolidated
------------ ------------- ---- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenue from external
customers $-0- $ 142,573 $108,164 $ 250,737
Cost of sales -0- 17,763 110,097 127,860
Gross profit -0- 124,810 (1,933) 122,877
Research & Development
1,822,851 1,822,851
</TABLE>
6. NOTES PAYABLE:
At March 31, 2000, $92,000 in trade payables was converted into a
short-term note. The short-term note payable is unsecured and bears
interest at 8%. The note is payable in monthly installments of $10,000
through December 2000. We also raised $177,000 from short-term related
party borrowings during the quarter ended March 31, 2000.
7. STOCKHOLDERS' DEFICIT:
Conversion of convertible debentures to equity/additional convertible
debt:
During January and March 2000, the investor in our $750,000 Series 1999-A
8% convertible notes elected to convert an aggregate of $517,956 of the
notes and accrued interest into 1,037,781 shares of our common stock.
Additionally, during March 2000, the investor loaned us an additional
$700,000 through the purchase of the second installment of the 8%
convertible notes. In connection therewith, we granted the investor
additional warrants to purchase 75,000 shares of common stock under terms
similar to those granted in 1999. The $700,000 of convertible notes
contain a beneficial conversion feature which has been recognized as a
discount on the notes in the amount of $641,200. The discount will be
amortized to interest expense over a three- month period commencing April
1, 2000.
Stock options and stock grants:
In January 2000, we granted 700,000 common stock options to key employees
and 1,400,000 common stock options to an officer/employee. These
three-year options are exercisable at $.34 per share (the stock price at
the grant date) and vest immediately.
- 8 -
<PAGE> 11
Additionally, 60,000 shares of our common stock were issued to an
officer/employee as additional compensation ($19,800 for the quarter
ended March 31, 2000). The options were granted at the market price at
the date of the grant. Accordingly, no compensation expense was
recognized in the financial statements for these options. Had the
accounting provisions of FAS 123 been adopted, compensation of
approximately $277,000 would have been recorded for the three months
ended March 31, 2000 based on the Black-Scholes option pricing model, and
net loss attributable to common stockholders and net loss per share for
the quarter would have been ($2,108,855) and ($.06), respectively.
<TABLE>
<S> <C>
Options outstanding at beginning of period 1,950,000
Granted during the period 2,100,000
---------
Outstanding and exercisable at March 31, 2000 4,050,000
=========
Weighted average remaining life 33 Months
Weighted average exercise price $ .71
</TABLE>
Common stock warrants:
The following table summarizes information for stock warrants outstanding
and exercisable at March 31, 2000.
<TABLE>
<CAPTION>
Warrants Outstanding and Exercisable
----------------------------------------------------------------------------------
Range of Weighted Avg. Weighted Avg.
Prices Number Remaining Life Exercise Price
----------------- -------------- ------------------- ------------------
<S> <C> <C> <C>
$ 2.34-2.40 218,750 39 months $ 2.38
$ .70 25,000 28 months .70
$ .40 3,800,000 55 months .40
----------------- -------------- ------------------- ------------------
Outstanding 1/1/00 4,043,750 54 months .51
Issued in 2000 325,000 41 months .85
-------------- ------------------
Outstanding 03/00 4,368,750 53 months $ .53
============== ------------------
</TABLE>
No warrants were exercised during the three months ended March 31, 2000.
Stock-based compensation recorded for warrants issued during the quarter
ended March 31, 2000 aggregated $31,230.
The fair value of the options and the warrants granted in 2000 were
estimated on the date of grant using the Black-Scholes option pricing
model with the following assumptions:
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<PAGE> 12
<TABLE>
<S> <C>
Expected life of options 2-3 years
Risk free interest rate 5.458%
Expected volatility 50%
Expected dividend yield 0%
</TABLE>
8. COMMITMENTS AND CONTINGENCIES:
SEC Enforcement Inquiry:
On November 19, 1999, we were notified that the Securities and Exchange
Commission was conducting an informal inquiry in connection with
matters relating to the Company's restatement of financial results. The
Commission has requested that we provide them with certain documents
concerning the previous revision of its financial results and financial
reporting documents. The Commission indicated that its inquiry should
not be construed as any indication that any violation of law has
occurred, nor as an adverse reflection upon any person, entity or
security. We are cooperating with the Commission in connection with
this inquiry and its outcome cannot be determined at this time.
9. SUBSEQUENT EVENTS:
Sales of common stock, proceeds from related party notes payable and
conversion of related party debt to equity:
From April 1 through May 12, 2000, we generated net proceeds of
approximately $412,000 from the sale of common stock (private placements
of unregistered stock at an average of $.33 per share) and $125,000 from
additional related party borrowings. Furthermore, on April 24, 2000
related party debt aggregating $334,000 at March 31, 2000 was converted
into 1,336,000 shares of common stock.
Conversion of preferred stock:
During April 2000, the holder of our Series A Preferred Stock converted
100 shares of the preferred stock ($100,000 stated value) into 357,143
shares of common stock.
Business Acquisition
On May 15, 2000, we executed an Acquisition and Stock Exchange
Agreement with certain individuals pursuant to which we agreed to
exchange an aggregate of 26,500,000 shares of our Common Stock for all of
the capital stock of Strategic Acquisition Corporation, a Florida
corporation. Upon closing of the transactions contemplated by this
Agreement, Strategic became our wholly-owned subsidiary. Pursuant to the
Agreement, all members of our Board
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<PAGE> 13
of Directors resigned, with the exception of Phillip M. Rappa. The
Agreement provides for the appointment of John Stanton as a director. The
Agreement also provides that the newly constituted Board appoint John
Stanton to serve as our Chief Executive Officer, Leon H. Toups to serve
as our Executive Vice President for Research and Development and Phillip
M. Rappa to serve as our Chief Operating Officer. A Chief Financial
Officer will be appointed in the future. The effect of this business
acquisition on our financial statements, including the pro forma effects
of the acquisition, has not yet been determined.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following discussion and analysis provides information which we
believe is relevant to an assessment and understanding of our results of
operations and financial condition. The discussion should be read in conjunction
with our audited consolidated financial statements and notes thereto.
During the three months ended March 31, 2000 revenues were principally
generated by sales of the BORS Lift system ($127,000). Sales in our Manufactured
Products contract manufacturing and Health Care divisions were limited due to
cash flow requirements and our limited resources in general, and our change in
management and transition to internet services with respect to Health Care. We
are in end-stage commercialization of our MagneGas product and are continuing to
develop our Starved Air Combustor, GWE and Tunnel Bat products. No revenues have
been derived from these products to date. Although we believe that sales of
MagneGas will contribute to our revenues in the near future, there can be no
assurances that revenues will be generated during fiscal 2000 without further
development.
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000
Net sales decreased approximately 36% for the three months ended March
31, 2000 to $160,073, as compared to $250,737 for the comparable three months
ended March 31, 1999. Sales for the comparable period in 1999 were principally
in the contract manufacturing segment. Revenues in the three months ended March
31, 2000 were from sales of BORS Lifts which had been previously manufactured
and required minimal cash resources to get to market.
The cost of sales for the three months ended March 31, 2000 represented
98% of net sales, or $158,644, compared to 51% of net sales, or $127,860, for
the three months ended March 31, 1999. The decline is attributable to the
inventory retrofit and design modification work associated with the sale of BORS
Lift units which was required for units sold in early 2000. The 1999 cost of
sales includes costs incurred in the contract manufacturing segment for which
gross profits vary by contract.
Operating, general and administrative expenses increased in the three
months ended March 31, 2000 to $1,515,283, or 947% of sales, compared to
$1,362,699, or 543% of sales, in the three months ended March 31, 1999. The
amounts are comparable on a year-to-year basis.
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<PAGE> 14
Expenses are attributable to high operating costs to support our technology
development, new product introductions and future business expansion. These
costs include legal and accounting fees that were not incurred during the
comparable period in 1999. Our direct research and development expenses declined
from $1,822,851 in the three months ended March 31, 1999 to $166,813 in the
three months ended March 31, 2000 or a 91% decrease. We attribute the decline to
non-cash charges relating to research-related stock-based compensation and
licensing agreements in the three months ended March 31, 1999, which did not
occur in the comparable period in 2000. Total stock-based compensation related
to research and development in the three months ended March 31, 2000 was $31,230
as compared to $1,672,070 in the three months ended March 31, 1999. In addition
to fewer stock and warrant grants in 2000, the decline is also partially a
result of the decline in the values assigned. Stock-based compensation is valued
based on the prices of recent stock issued. The average price per share of stock
sold pursuant to private placements declined from $.75 per share in the three
months ended March 31, 1999 to $.33 in the three months ended March 31, 2000.
Interest expense was up from $92,825 during the three months ended
March 31, 1999 to $137,264 during the three months ended March 31, 2000 due to
higher levels of borrowing during the periods, primarily from the convertible
debentures. Of the $92,825 in interest expense in 1999, $87,500 was attributable
to a beneficial conversion feature for the convertible debentures.
LIQUIDITY AND CAPITAL RESOURCES
We have experienced recurring net losses since our inception and, as
such, have experienced negative operating cash flows through March 31, 2000. We
historically funded these negative operating cash flows with proceeds from sales
of common and preferred stock, notes and convertible debentures payable and
equipment sale/leaseback transactions. The total amount received from these
sources approximated $2,100,000 during the quarter ended March 31, 2000 and
$537,000 from April 1 through May 12, 2000. Notwithstanding the proceeds of
these financing sources, we had negative working capital of approximately
$2,100,000 at March 31, 2000.
On May 15, 2000 we acquired 100% of the outstanding stock of Strategic
Acqisition Corporation, a Florida corporation, in exchange for 26,500,000
shares of common stock, and, in connection therewith, our management and board
of directors have undergone significant changes. Management is currently
evaluating our cost structure and expects to make significant cost reductions
in the near term. Additionally, management expects to achieve certain economies
of scale by combining certain of our operations with those of the acquired
corporation. Additionally, we expect to have limited short-term access to the
positive working capital resources of the acquired corporation. However, there
can be no assurance that these efforts will result in positive operating cash
flows or restore our working capital to adequate levels. As such, we may
continue to require additional equity or debt financing in order to cover our
cash requirements and continue as a going concern.
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<PAGE> 15
NOTE ON FORWARD-LOOKING STATEMENTS
CERTAIN STATEMENTS IN THIS REPORT ON FORM 10-QSB, UNDER THE SECTION
"MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION," RELATE TO FUTURE
EVENTS AND EXPECTATIONS AND AS SUCH CONSTITUTE "FORWARD-LOOKING STATEMENTS,"
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THE
WORDS "BELIEVES," "ANTICIPATES," "PLANS," "EXPECTS" AND SIMILAR EXPRESSIONS IN
THIS REPORT ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES, AND
OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF
THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR
ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS AND TO VARY
SIGNIFICANTLY FROM REPORTING PERIOD TO REPORTING PERIOD.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
On February 15, 2000, we filed a Form 8-K to report that, on January 5,
2000, Harper, Van Scoik & Company, LLP, the independent accountant who was
previously engaged as the principal accountant to audit our financial
statements, resigned. On March 22, 2000, we filed a Form 8-K/A which included a
letter dated March 2, 2000 from Harper in which the firm stated that it had no
disagreement with the disclosures contained in the Form 8-K filed on February
15, 2000.
On February 29, 2000, we filed a Form 8-K to report that we retained
the services of Aidman, Piser & Company, P.A. to audit our financial statements.
- 13 -
<PAGE> 16
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
EARTHFIRST TECHNOLOGIES, INC.
(Registrant)
Date: May 22, 2000
By:/s/ John Stanton
John Stanton, President and Chief
Executive Officer
- 14 -
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 584,092
<SECURITIES> 0
<RECEIVABLES> 28,969
<ALLOWANCES> 0
<INVENTORY> 970,462
<CURRENT-ASSETS> 1,663,475
<PP&E> 2,585,739
<DEPRECIATION> (718,100)
<TOTAL-ASSETS> 3,860,967
<CURRENT-LIABILITIES> 3,722,883
<BONDS> 297,968
0
750
<COMMON> 36,627
<OTHER-SE> (1,135,550)
<TOTAL-LIABILITY-AND-EQUITY> 3,860,967
<SALES> 160,073
<TOTAL-REVENUES> 160,073
<CGS> 158,644
<TOTAL-COSTS> 158,644
<OTHER-EXPENSES> 1,682,096
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 137,264
<INCOME-PRETAX> (1,817,930)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,817,930)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,831,055)
<EPS-BASIC> (.05)
<EPS-DILUTED> (.05)
</TABLE>
